DC Circuit Restores $20 Billion in Climate Grants, Overturning EPA Termination
A six-to-four appellate ruling blocks the EPA from clawing back IRA climate funding, but $7 billion in solar grants faces a slower path through a separate tribunal.
Six of the U.S. Court of Appeals for the District of Columbia Circuit's 10 judges voted on Tuesday (2026-08-04) to block the Trump administration from rescinding $20 billion in climate grants, handing EPA Administrator Lee Zeldin a significant legal defeat. In a three-page unsigned opinion, the divided court upheld a preliminary injunction and found that the EPA had moved to terminate the grant program "based solely on a policy disagreement" with the authorizing statute — a legally insufficient basis for cancellation.6,5
The immediate protection applies to $6.97 billion already disbursed to Climate United, the largest single beneficiary under the Greenhouse Gas Reduction Fund. Clean energy developers, municipal lenders and state-level green finance programs that had been operating under uncertainty about clawback risk now have, at minimum, a court-ordered stay of EPA collection.6
Congress authorized $19.97 billion through the Inflation Reduction Act in 2022 for the broader GGRF, directing the funds to local governments and other recipients pursuing climate, infrastructure and clean energy goals, according to an amicus brief filed in the case. Zeldin moved to terminate all of it. The appellate majority concluded he lacked the authority to do so on policy grounds alone.6,1
The $7 billion Solar for All program — part of the same $27 billion GGRF — sits in different legal territory. A federal judge ruled on Monday (2026-06-01) that challenges to those terminations can only proceed in the U.S. Court of Federal Claims, a specialized tribunal for money claims against the government. That procedural ruling was a setback for the nearly two dozen states that had filed in district court hoping for quicker relief.1
Zeldin's treatment of the two pools was inconsistent from the start. He moved swiftly to cancel the $20 billion but initially left the solar program alone, given that it funded projects across nearly every state. He eventually terminated the solar grants as well, arguing that legislation rescinding "unobligated" GGRF funds required him to do so.1
The administration's own internal documents have worked against it in court. The U.S. Department of Energy said in a July 15 court filing, first reported by the New York Times on Friday (2026-07-24), that the administration's cancellation of $7.6 billion in clean energy grants was "based solely on the political identity of the grant recipient's state." The DC Circuit used nearly identical reasoning in its August 4 rebuke of the EPA's $20 billion termination.4,6
Alongside the grant litigation, the administration has been paying energy companies to exit clean energy commitments rather than terminating those commitments through regulatory action. TotalEnergies is receiving nearly $1 billion from U.S. taxpayers to walk away from two offshore wind leases off the coasts of New York and North Carolina, under a deal announced in March. The company agreed to reinvest the Treasury's reimbursement — covering the $928 million it paid for those leases — into U.S. oil and gas projects. The administration is reportedly spending close to $2 billion in total on such buyouts.2
The two TotalEnergies projects together would have generated more than 4 gigawatts, enough to power roughly 1.3 million homes, according to figures in the lawsuit filed by New York's attorney general on Tuesday (2026-06-02). The same complaint put the savings from the New York project alone at $10 billion for ratepayers statewide, including $500 million for low-income households.2
The DC Circuit's August 4 decision will not reach the offshore wind buyout litigation directly; those cases turn on different legal theories. But the same court's refusal on Friday (2026-06-26) to let the administration walk back a Biden-era soot pollution rule illustrates a pattern: repeated attempts to reverse agency positions by administrative fiat are receiving skeptical review at the appellate level.3
The Solar for All program remains the most exposed piece of the IRA clean energy funding architecture. With state challenges confined to the Court of Federal Claims, the path to reinstatement is longer and less certain. Proceedings there, and whether Zeldin's unobligated-funds argument survives judicial scrutiny, are the next concrete legal tests for the remaining $7 billion.1